There were numerous speculations about London property market before Brexit. Many people thought that the city would lose the image of being the “hot spot for property investment” if London decides to move out of EU.
Three months have passed after Brexit but still the city doesn’t lose the charm. Experts feel that there will not be a change either. The number of investors shows an increasing trend and individuals and institutional buyers secure the best properties.
Does it mean that investment in London is foolproof? Yes, it is! Statistics says that most of the pockets will give considerable returns in the coming times. Some of the places show the high potential of getting transformed into places with extraordinarily high property values.
Certainly, the development has happened in pockets initially. However, the area is expanding with great speed. Very soon, there will be good quality townships, residential apartments and commercial complexes in the main and suburban areas of London with new-age facilities and incredible architecture.
Experts say that the face of London will have a complete makeover in the coming decades. What are the driving factors behind this popularity? Here are a few to mention.
Top reasons that retain the charm of London
London remains the first choice when local or foreign investors decide about the best place to invest in properties. Though every investor has a unique set of assumptions about it, here are some widely accepted rationales behind the charm of London.
The “surround-sound” effect
When small downtown or suburban areas gain popularity and the property rates increase, there is a similar effect in the surrounding areas also. Though neighboring areas take some time to gain momentum, it happens without fail. There are several examples of it in London. For example, Earls Court got a phenomenal popularity and the surrounding areas such as North End Road in Fulham also got benefited by it. Similarly, when Old Oak became a big transportation hub; Acton and Harlesden were the obvious beneficiaries.
Nowadays, real estate developers follow a comprehensive and holistic approach. They come out with properties in the main focus area and surrounding places. When there is saturation in the prime focus area, other places become lucrative.
New and fancy townships offer lavish lifestyle
When people invest sizeable money in new properties, they expect extraordinary quality and looks. Real estate developers understand the pulse of the market and come out with modern, stylish homes and business properties. They are not only equipped with state-of-the-art amenities but also get translated to excellent quality and time efficiency over a period.
There are recreational facilities, club houses, shopping centers, fitness clubs and spas, gardens, and pools; these modern townships are self-sufficient and ideal for everyone. They make efficient use of space and environment-friendly.
Nowadays, modern properties receive great acclaim and accolade from buyers. Kensington and Chelsea have luxurious basements which were appreciated by commercial and domestic buyers. More properties are expected in future across London.
Rents are increasing, so as capital returns
Yes, it is not a speculation or assumption without a data point. Reports say that the prices have increased phenomenally in last ten years. To be precise, the growth is more than 80 percent which is phenomenal. In fact, the rise in last five years is the highest. Researchers expect an annual growth of 5 percent in the coming years. Isn’t it a fabulous return as compared to other modes of investment? Even if you factor it or moderate up to some extent, even three percent growth rate is pretty good. No wonder, investors do not hesitate in putting loads of money in London properties.
Not just capital returns but rents have also shown an increasing trend. Since the average weekly rent reaches above 600 GBP and experts speculate that it will increase further; buying a property is profitable irrespective of you rent it out or use it personally. Research indicates that tenants in London pay more money on rent than the mortgage.
Easy access to funds and low base-rate of interest are other crowd pullers
Economists rate the UK economy high as compared to other countries of Europe. In spite of the fact, the base rate of interest is quite low in the UK. Since there are plenty of lenders in the market (and every year hundreds of new lenders getting added to it), the competition is cutthroat. Hence, it becomes a “buyer’s market”. New homeowners fix the interest rates on a long-term basis which is good from the market stability perspective.
Wholehearted support by the UK government
The UK government maximizes the opportunities for buyers and sellers by moderating the foreign investment and capital growth. First-time buyers take benefit of the incentive scheme for the help-to-buy initiative.
Because of the great price difference between London and other property markets in the country, the low-end properties show more activities. Since the UK government is making consistent and sincere efforts to maximize the investment in properties by local and foreign investors, the sale of London properties gets a good thrust because of it. People are taking a benefit of “Help to Buy Incentive” initiative of the UK Government. With this, there is a push in the sales market instead of the rental market.
Right ratio of supply versus demand
Economists always emphasize on the right balance of supply and demand to keep the market dynamics healthy. A skewed market doesn’t keep the economy healthy. In the recent past, demand was slightly higher than supply. Therefore, the property rates in London gave good yield to property owners. At the same time, the prices were favorable to buyers also because they were not exorbitant.
There are several “preferred areas” in London
All areas in London aren’t equally profitable (one can’t expect it also). While some areas gave extraordinary returns, some gave marginal profits. However, the majority of areas in London were moderate to excellent profitable. Therefore, London is amongst the preferred property markets in the UK. Residential and commercial, both types of properties offered good value for money.